As a startup, you already have so much to deal with simply getting your business off the ground. But what do you need to know and do about your tax? Let’s take a closer look at the topic of management accounts.
What Are Management Accounts?
Management accounts are a more detailed level of account that goes beyond daily metrics to the key business metrics that really matter to the success of your business. These financial reports are prepared on a monthly or quarterly basis to give you a key insight into how your operation is performing.
Management accounts can be prepared by entrepreneurs themselves or by Evesham accountants such as https://www.randall-payne.co.uk/services/accountancy/evesham-accountants.
What Do Management Accounts Measure?
Management accounts can measure your business profit and loss, your balance sheet, your KPIs and your cash flow forecast. But the important thing about these accounts is that they are for you as the business owner and driver. They exist to help you run your business better. This means that they are different from year-end accounts, which mainly exist to tick your HMRC reporting and compliance box for tax.
Are Management Accounts Useful for Startups?
Yes, absolutely! Because your management accounts give you a clear and up-to-date status of your business’s health, you can make better decisions based on hard data rather than gut feel. Your management accounts can be used to find out where the cash is going, whether your business is actually profitable, which products are worth producing and whether you can afford to invest and/or hire to grow.
What Are The Advantages of Management Accounts?
The main advantage of management accounts is that they are specifically for your business. This means that if you need certain types of information for a key focus, you can gather the data sets and metrics that will help you make better decisions. They are also business-specific in the sense that management accounts are not regulated and don’t have to meet any compliance regulations. You don’t need to submit them to HMRC, so you can tailor them exactly to your needs.
